Strategic Mechanisms to Deal with Airport Development - Essay Example

Strategic decision making mechanisms available to deal with airport development at the national and local levels Table of contents I. Introduction II. Airport development in UK - overview IIa. Stages of decision making process for airport development in UK IIb. Governmental bodies IIc. Spatial planning process IId. Strategic decision mechanisms III. Conclusion References I. Introduction Industries around the world are currently characterized by a strong competition mostly because of the development of technology and the increase of the customer demands. Regarding specifically the airline industry in UK, this could be characterized as a profitable one if taking into account the level of development of this industry within the regional and the global market. However, it should be noticed that the development of the airline industry at a regional level faces several difficulties mostly because of the delays on the realization of relevant projects and schemes across the country. It seems that in the area of strategic planning, the British airline industry needs several alterations and improvements in order to meet the challenges set within the global market. The delays in the application of the relevant projects as described above could affect the performance of the industry towards its competitors and for this reason appropriate plans of action should be designed in order to support the improvement of the particular industry in the long term. Current paper refers to the strategic decision making options/ methods that can be used in the airport development in Britain. Towards this direction, general principles and schemes of strategic decision making procedure will be presented while the current trends that characterize airport development in Britain are also going to be analyzed. On the other hand, a comparison with the conditions that apply in the relevant sector of Ireland has been considered to be necessary in order to understand the elements of airport development and their role within different markets. In this way, any possible differentiation among the British and the Irish market regarding the airport development will be revealed offering valuable information on the formulation and application of strategic decision making mechanisms in both the above countries. II. Airport development in UK - overview The main aspects of the airport development in Britain are presented in the White Paper “The Future of Air Transport” which published by the British government in December 2003. In accordance with this paper, current efforts in UK regarding the airport development in the various regions across the country focus on the following issues: ‘a) A new runway at Stansted, to be operational by 2011/12; b) A third runway at Heathrow, as long as legal air quality limits are not breached. If this is not possible, Gatwick will have the runway instead, to be operational by 2020; c) A new runway in Birmingham; d) Also, existing airports across the country have been given the green light to extend runways and build new terminals in what amounts to an unprecedented long-term assault on the countryside’ (CPRE, 2006). All the above projects are however at a preparatory stage and are just remaining on paper. Still, there are no appropriate initiatives for the realization of the above governmental suggestions within a short time period. On the other hand, the realization of these plans could may result to severe environmental consequences for Britain as the land of the country is going to be occupied by airport facilities and runways – an aspect that it is rather negative for the British countryside even if such a prospect would be positive for the commerce and the financial development of UK. IIa. Stages of decision making process for airport development in UK In order to improve the position of the country within the international market – regarding specifically the airline industry – the British government should proceed to a series of changes in the structure and the use of existed establishments (in airports across Britain). The airport development of the country could be achieved through a specific procedure. The identification of the problems related with the airline industry in UK – at its current position – should be a priority within the above initiative. At a second level, the choice of the appropriate areas (in terms of spatial planning) would be the procedure that should follow. Furthermore, the development of the strategy that would be more appropriate for the specific industry (in terms of increase of profitability in the long term) should take place. As for the first stage, the identification of the operational failures across the industry could take place using the appropriate market research while the results of empirical research related with the area should be also taken into account. In this context, the most significant stages for the airport development in UK should be the design and the completion of the spatial planning process and the choice of the appropriate strategy in order for the industry to reach a satisfactory level of performance especially in the long term. A reference to the governmental bodies that are involved in the whole effort is required in order to evaluate the quality of the work produced towards the development of the country’s airports. IIb. Governmental bodies Currently, all issues related with the aviation industry in UK are under the control of the the Civil Aviation Authority (CAA), which is ‘a public corporation that was established by Parliament in 1972 as an independent specialist aviation regulator and provider of air traffic services; its activities include economic regulation, airspace policy, safety regulation and consumer protection’ [1]. The existence and the operation of the above service ensures that in UK all the appropriate rules for airport development are being appropriately applied – at least at the highest possible level. On the other hand, the British government is trying to ensure the application of all appropriate rules when dealing with the design of the plans that are going to be applied in the airport development across the country. In this context, Sir Nicholas Stern, ‘Head of the Government Economic Service and Adviser to the Government on the economics of climate change and development’ [2] has been delegated the task of reviewing all issues related with airport development in Britain and the possible consequences in the environment. His review, among other documents published in the same area can be used in order to design the appropriate framework for airport development in UK. IIc. Spatial planning process The airport development process in UK should be based on a specific spatial planning process which would be characterized by the variation and the intense of the efforts made in all relevant fields. Furthermore, this process should be extended in many areas. The identification of current status of the country’s infrastructure should be the first step in the whole process. In this context, in accordance with a report published by the London Assembly [5] ‘much of London’s public service estate is more than a hundred years old and is often not fit for purpose; as a result, public bodies – such as the fire brigade and the police - are having difficulty in adapting their buildings to provide services more efficiently to a growing population’. In order to confront the above problems, it is suggested that the Department of Media, Culture and Sport should review periodically all estates of English Heritage ensuring the quality and the appropriateness of any work done towards the development and the conservation of existed buildings. In the case of airport development, this strategy would help to protect any property that belongs to the English Heritage from potential damages. In many areas, the application of the appropriate spatial planning process is not easily achievable either because of the lack of the appropriate strategy for this initiative or because of the reactions of local communities. As an example in the case of Heathrow, the relevant plans have been submitted in London Assembly by October 2005, however even if these plans have been approved there are no specific measures taken for their realization mostly because of the reactions of commuters that live in the regions around Heathrow. The spatial planning process related with Heathrow includes (in accordance with the proposals made to London Assembly by BAA) ‘plans for a sixth terminal and third runway at Heathrow’ [5]. Apart from the above, it should be noticed that any spatial planning plan involved in the airport development in UK should include appropriate suggestions for land – use change. In accordance with Koomen et al. (2007, 1) the land – use – change is ‘crucial for policy makers across the globe that have to deal with such varied topics as: urbanisation, deforestation, water management, erosion control and so on’. In any case, the spatial plans applied for the airport development in UK should refer to the following issues: a) development of existed transport network in order to meet the customers’ (travellers’) needs, b) development of public facilities in existed airports (the increase of passengers will be followed by increased demands in public facilities), c) development of existed road network and d) improvement of air traffic management in order to reduce the time required for the landing and departure in all British airports. Other plans related with the protection of the environment should be also made taking into account that the increase in the number of flights on a daily basis will lead to the increase of erosions and pollution in all British regions. IId. Strategic decision mechanisms – comparison with strategies followed by Ireland – SWOT analysis Regarding the above when designing the airport development of Britain, the country’s government should take into account a series of issues. At a first level, the appropriate supply chain management will help the sector to reduce costs and the use the funds revealed in other sectors, like the environment. Indeed, the study of Cook et al. (2001) showed that in supply chain management the following issues are of major importance: ‘making and keeping relationships, implementing new technology in the supply channel, the use of forecasting to increase supply chain effectiveness, outsourcing to increase efficiency, and cost management as a strategic weapon’ (Cook et al., 2001, 14). What is the strategic target? Supplier Customer Competitor What is the strategic thrust? Differentiation Cost Innovation Growth Alliance What is the mode? Offensive Defensive What is the direction? Use Provide Figure 1 - Wiseman’s Strategic Option Generator (Wiseman, C., 1985, ‘Strategy and Computers’, Dow Jones – Ivwin) On the other hand benchmarking could be used in order to choose the most effective strategic planning process in the long term. In this context, it has been supported by Nattermann (2000, 22) that ‘best-practice benchmarking--the measurement and implementation of the most successful operational standard or strategy available in an industry--can be one of the most effective tools for increasing a corporations efficiency, productivity, and, ultimately, earnings’. All the above issues should be considered taking into account the particular characteristics of the specific sector as these characteristics are presented in the Stern Review: ‘unabated climate change poses serious environmental, economic and social risks, and the ratchet effect of the flow-stock process, particularly since carbon dioxide (CO2) has such a long residence time in the atmosphere, makes delay costly; the case for the strength of action is also driven by the science’ (Dietz et al., 2007, 124). Apart from the above issues, the strategic planning process in the airport development could be also based on a series of strategic frameworks, like the one of Wiseman presented above in Figure 1 or the Strategic Grid (Figure 2). Strategic impact of application development portfolio Low High Low Support Turnaround High Factory Strategic Figure 2 - Strategic Grid (McFarlan et al., 1983, 19) The above two strategic frameworks could be also combined with Porter’s analysis of Industry Competition (five forces). The application of all these frameworks will be based on the characteristics of the specific sector and the government’s plans for action as they are presented through the governmental documents published through the years in UK. Figure 3 - Forces of Industry Competition (Porter, 1998, 22) In a general context, we could refer to the study of Walker (1998, 9) who supported that “costs of human resource processes and initiatives (investment of money, time, and other resources) are best measured in relation to their outcomes while unusually high recruiting and training costs may be justified by the resulting business results achieved”. In other words, the development of appropriate strategic plans regarding the airport development has to be based on a series of elements while the feasibility of the plans produced is a prerequisite for their applicability particularly in the long term. Moreover, the position of British airport development towards the Irish one could be better represented through the SWOT analysis of the industry as it can be formulated using the particular characteristics of the sector and its prospects in UK. Strengths Quality of services provided to its customers Position in the global market Management techniques applying in the firms of the specific industry High quality of services provided to customers Weaknesses Lack of appropriate tools for the control of cost in the long term Lack of appropriate strategic options for the differentiation of strategies followed in the specific industry Costs higher than profits – at least for the moment – in the particular industry Opportunities High interest of investors for the particular sector in Britain High rate of development through the years Increase of customer preference for the particular industry Threats Financial turbulences within the global market Turbulences in British market because of the global financial crisis Global environmental crisis that can lead to the reduction of flights around the world Figure 4 – SWOT analysis for British airline industry On the other hand, Ireland has already developed a spatial planning process regarding the improvement of the airline industry [3]. Moreover, in accordance with the study of O’Neill ‘Irish airlines currently serving 4 US destinations while upwards of 20 US airports have shown an interest in direct links’. On the other hand, it is noticed that the country’s infrastructure currently includes the following features: a) State airports, b) Regional Airports, c) Integration with other transport Infrastructure and d) air traffic management’ [4]. III. Conclusion The realization of the plans related with the airport development in UK is a challenging task. The financial turbulences that characterize the particular industry and the environmental crisis at a global level have created additional requirements for the procedure that should be followed for the design and the implementation of these plans. In accordance with the above, the steps of the strategic decision making process in the airport development should be decided using the existed theories related with the strategic planning process (as described above) and the needs and the demands of the particular sector. The governmental proposals regarding the airport development in UK – as included in the White paper – can be valuable elements towards the formulation of the strategic decision making process regarding the airport development in UK. Other issues related with the country’s financial strength and its environmental needs would be also taken into account in order to design a feasible strategy for the airport development across the country. However, it is necessary that the bodies that participate in the whole effort (like the Civil Aviation Authority mentioned above) are appropriately prepared in order to face the challenges that such an effort sets both in the short and the long term. References CAA (Civil Aviation Authority) (2006) Strategic Review of General Aviation in the UK CAA, 2006, www.caa.co.uk [1] Cook, J. S., Debree, K., Feroleto, A. (2001). From Raw Materials to Customers: Supply Chain Management in the Service Industry. SAM Advanced Management Journal, 66(4): 14-23 CPRE (2006) Planning Policy Position Statement: Aviation. CPRE England, January 2006. www.cpre.org.uk/resources HM Treasury (2006) Stern Review of the Economics of Climate Change – Final Report Cambridge University Press/HM Treasury, October 2006 www.hm-treasury.gov.uk/independent_reviews/stern_review_economics_climate [2] Koomen, E., Rietveld, P., Nijs, T. (2007) Modelling land-use change for spatial planning support. The annals of regional science, 1-15 London Assembly (2007) available at http://www.london.gov.uk/assembly/reports/plansd.jsp [5] O’Neill, J. Towards Sustainable Airport Development, available at http://www.fdb.ie/Julie_ONeil.pdf [4] Porter, M. (1998) On Competition. Harvard Business School Press Shepley, C. A National Spatial Planning Framework for England? available at http://www.tcpa.org.uk/reg_futures/chris_shepley.pdf [3] Walker, W. (1998). Are We Using the Right Human Resource Measures? Human Resource Planning, 21(2), p. 7-10 Wiseman, C. (1985) ‘Strategy and Computers’, Dow Jones – Ivwin Read More